Percentage Point Increase of Icelandic Central Bank Rate to 4.75%

June 22, 2022

The Central Bank of Iceland raised its policy rate today by a full percentage point, just as it had done at its prior review in early May. The rate from now will be at 4.75%, up from 2.0% at the end of 2021, and a pandemic low of 0.75% from May 2020 until May 2021.

The MPC considers it likely that the monetary stance will have to be tightened even further so as to ensure that inflation eases back to target within an acceptable time frame. Near-term monetary policy decisions will depend on developments in economic activity, inflation, and inflation expectations. Decisions taken at the corporate level, in the labor market, and in public sector finances will be a major determinant of how high interest rates must rise.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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